Trade Bank Plc V Benilux (Nig.) Ltd (2003)

LAWGLOBAL HUB Lead Judgment Report

MOHAMMED, J.S.C.

Benilux (Nigeria) Limited, who hereinafter shall be referred to as the respondent, had business transaction with Messrs Accountable Finance and Investment Company. As a result of the business transaction Messrs Accountable Finance and Investment Company Limited, issued cheque No. 03370-031150013 A/C No. 102-3720151-01-95, dated 27th January, 1993, in the sum of N1,000,000.00 (One Million naira) payable to the respondent. The cheque was marked “A/C Payee only” and “Not Negotiable”. It was to be drawn on the account of the company at Martins Street Branch of the Trade Bank PIc. Trade Bank PIc is the appellant, in this appeal. In the cheque the appellant was mandated to pay the sum of N1,000,000.00 to the respondent. Instead of paying the amount to the respondent the appellant paid the one million naira to a stranger.

When the respondent found out what had happened it challenged the appellant on the wrongful payment. The appellant accepted responsibility, but pleaded for time to enable it rectify the situation and make payment properly to the respondent. When the waiting was too long and the payment was not forthcoming the respondent went to the Lagos High Court and filed the following claims:

“(i) A declaration that the defendant acted unlawfully and improperly in paying cheque No. 03370-031150013 “A/C Payee only” “Not Negotiable” drawn on the defendants, by Accountable Finance and Investment Co. Ltd. in favour of the plaintiffs to a person or persons other than the plaintiffs at the defendants’ Martins Street Branch, and otherwise than through a collecting banker acting for the plaintiffs.

(ii) A declaration that the plaintiffs are entitled to be credited with the value of the cheque (i.e. N1,000,000.00) referred to in paragraph 1 hereof on the expiration of 5 working days from the presentation of the same to the defendants on the 28th January, 1993 and that the defendants have wrongfully and improperly deprived the plaintiffs of the use and enjoyment of the said sum of N1,000,000.00 from the 3rd February, 1993.

(iv) An order that the defendants shall pay the plaintiffs the said sum of N1,000,000.00 with interest at 50% per annum from 3rd February, 1993 to 31st December, 1993 and further interest at 15% per annum from 1st January, 1994 until judgment and thereafter at 15% per annum until the judgment shall have been satisfied.”

Soon after the action had been filed, learned counsel for the respondent, Professor Adesanya, SAN, filed and argued an ex-parte motion with the following prayer:-

“An order of interim injunction (Mareva) restraining the defendants, their servants and/or agents from removing from the jurisdiction, disposing of and/or dealing with their assets within the jurisdiction in so far as the same do not exceed the sum of N2,000,000.00 and in particular its bank balance with the Central Bank of Nigeria or their claims thereto until the determination of the Motion on Notice”.

The application was granted. The order was served on the Central Bank which attached the sum of N2 million in the account of the appellant kept with the Central Bank. In response to this order the appellant by way of motion on notice, dated 14/12/94, prayed for striking out the suit for lack of jurisdiction of the trial court. Alternatively, the appellant prayed for the vacation of the Mareva injunction. In a considered ruling, the trial High court Judge held that the State High Court had jurisdiction to hear the suit. Secondly, he declined to vacate the Mareva injunction which he granted earlier.

Dissatisfied with the said ruling, the appellant filed an appeal to the Court of appeal. Before the hearing of the appeal, at the Court of Appeal, the appellant filed a motion and prayed for an order substituting the order granted by the High Court attaching the appellant’s N2,000,000.00 with the Central Bank of Nigeria with a bank guarantee from any reputable bank in Nigeria. The application was granted. The Court of Appeal ordered the appellant to provide a bank guarantee in the sum of N2,000,000.00 from Afribank Plc. The bank guarantee was lodged in Afribank Plc on 26th November, 1996. The Court of appeal thereafter heard the appeal and delivered its judgment on 29th May, 2000. The appeal filed by the appellant was dismissed. It is against the said judgment that the appellant has filed this appeal.

The appellant identified the following two issues for the determination of the appeal:

“(i) Whether the High Court of Lagos State is vested with jurisdiction to hear and determine the plaintiff’s claim and

(ii) Whether the ex-parte order of Mareva injunction ought not to have been discharged in the circumstances.”

The respondent adopts the issues as formulated by the appellant. The only issue pertinent for the determination of this appeal, in my view, is the issue questioning the jurisdiction of Lagos State High Court to decide the suit filed by the respondent. The issue about the ex-parte order of Mareva injunction has been overtaken by events before the hearing of the appeal at the court below. The application to substitute the Mareva injunction with a bank guarantee which the court granted had removed the Mareva injunction from being an issue in dispute between the parties. An issue in dispute is the subject of litigation. It is a matter for which a suit is brought and parties join issues for the determination of the dispute. Courts will only consider a justifiable controversy upon existing state of facts and not upon hypothetical dispute or academic moot. The issue of Mareva injunction is no more pertinent as a dispute between the parties. I therefore strike out issue II being an incompetent issue.

On jurisdiction, learned counsel for the appellant, Layi Babatunde, maintained the submission he made both at the High Court and the Court of Appeal that a State High Court has no jurisdiction to determine the respondent’s claims as endorsed on the Writ of Summons. Learned counsel submitted that there is no doubt that the respondent’s claim had arisen because of a banking transaction which the company alleged had occasioned a loss to it. But, counsel further argued that the Federal High Court has exclusive jurisdiction to the exclusion of any other court in civil causes and matters arising from banking, save those transactions between banker and customer. He referred to section 230(1)(d) Constitution (Suspension and Modification) Decree 107 of 1993 which was the law applicable at the time the cause of action arose. To buttress his argument the learned counsel referred to the case of Uwaifo v. A.G., Bendel State (1982) 7 SC 124. Let me refer to the provision of Section 230(1)(d) of Constitution (Suspension and Modification) Decree 107 of 1993. It provides as follows:-

“230(1) Notwithstanding anything to the contrary contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly or a Decree, the Federal High Court shall have and exercise jurisdiction to the exclusion of any other court in civil causes and matters arising from –

(d) banking, banks, other financial institutions, including any action between one bank and other, any action by or against the Central Bank of Nigeria arising from banking, foreign exchange, coinage, legal tender, bills of exchange, letter of credit, promissory note and other fiscal measure: Provided that this paragraph shall not apply to any dispute between an individual customer and his bank in respect of transactions between the individual customer and the bank;”

Mr. Layi Babatunde argued that the dispute between the respondent and the appellant would not fit in the proviso to section 230(1)(d) of Decree 107, because the respondent had no account with the appellant and there is no banker/customer relationship between them. In Karimu Adisa v. Emmanuel Oyinwola (2000) 10 NWLR (Pt. 674) 116; (2000) 6 SC (Pt. 11) p. 47 at 65 this court held that the unlimited jurisdiction of the High Court of a state may be limited as provided for by the Constitution. The State High Court has no jurisdiction in matters provided under section 230(1)(d) of Decree 107 except disputes between an individual customer and his bank in respect of a transaction between the individual customer and the bank. In other words, section 230(1)(d) of Decree 107 provides a limitation to the general and all embracing jurisdiction of a State High Court. Items listed under section 230(1)(d) of Decree 107 can be determined, exclusively only by the Federal High Court.

Mr. Layi Babatunde further submitted that under section 73 of the Bills of Exchange Act, Cap 35, Laws of the Federation of Nigeria, 1990 a cheque is defined as “a bill of Exchange” and as such a cheque cannot therefore be a chattel for it to be converted to the use of someone else.

Since the respondent is not a customer of the appellant’s bank the case of the appellant falls within the exclusive jurisdiction of the Federal High Court.

In his reply to the above submission, learned counsel for the respondent pointed out that the respondent’s statement of claim stated that the appellant unlawfully and improperly paid over to a person other than the plaintiff/respondent a crossed cheque, marked A/C Payee only and not Negotiable. And it is the act of paying such cheque to a person other than the plaintiff/respondent that brought about the claim of the plaintiff in the first relief. The Relief of the plaintiff/respondent is founded in the tort of conversion. This is clear, because the appellant dealt with the respondent’s cheque in a manner inconsistent with the respondent’s rights whereby the respondent has been deprived of the use and possession of the same. The tort of conversion is committed when the person entitled to the possession of a chattel is permanently deprived of that possession and the chattel is converted to the use of someone else. See Clerk and Lindsell on torts 15th Edition, page 1020 paragraph 21-05 and Ojini v. Ogo Oluwa Motors (1996) 1 NWLR (Pt. 534) 353.

Now, it is settled law by a long string of authorities that bankers who collect cheques and pay them to those not entitled to the proceeds in the cheques are guilty of the tort of conversion. See Kleinwort v. Comptoir National d’Escompte de Paris (1984) 2 QB 167 and Fine Art Society v. Union Bank of London (1886 -87) 17 QBD 705. In A.L. Underwood Limited v. Bank of Liverpool and Martins (1924) 1 KB 775 Bankes L.J. opened his judgment with the following statement:

“The facts in this case are not seriously in dispute. The real issue between the parties is as to the true inference to be drawn from those facts, and the fate of this appeal depends, in my opinion, upon what the true inference are. The material facts are as follows: [His Lordship then stated the facts as above set out, and proceeded as follows:] One defence relied on by the appellants was

that on those facts there was no evidence of any conversion of the cheques. Unless the appellants can justify their action upon one or other of the defences upon which they rely they appear to me quite clearly to have been guilty of a conversion of all the cheques.”

In Bute (Marquess) v. Barclays Bank (1955) 1 QB 202 one McGaw was appointed manager of three farms in Scotland belonging to the plaintiff. His duties included the making of applications to the Department of Agriculture for Scotland for Hill sheep subsidies in respect of the farms. In January 1949 he forwarded three such applications. Before the subsides were paid, McGaw left plaintiff’s employment. In September, 1949, the department, in accordance with their usual practice, sent to McGaw, in satisfaction of the applications three warrants crossed “Not Negotiable” and stated that if the warrants were presented within one month through a bank Mr. McGaw should be paid 133 Pounds.10S (in one case) in respect of Hill Sheep subsidy, 1949. Mr. McGaw opened personal account with the warrants. He was later permitted by the bank to withdraw the proceeds of the warrants. The Bank (Barclays Bank) was sued for conversion and it was held that the plaintiff was entitled to recover the amount payable under the warrants.

I have no doubt that the respondent, in the case in hand, can sue the appellant in conversion for the proceeds of the cheque which the appellant paid to a stranger who is not the payee of the cheque. The plaintiff/respondent’s case is simply a tort of conversion and the action filed by the plaintiff/respondent against the appellant can be entertained by any State High Court. See 7up Bottling Company Limited & Ors. v. Abiola and Sons Bottling Company Limited (2001) 13 NWLR (Pt. 730) 469; (2001) FWLR (Pt. 70) at page 1650. Having failed to have this issue resolved in its favour this appeal has accordingly failed and it is dismissed.

The judgment of the court of appeal is hereby affirmed. I award N10,000.00 costs in favour of the respondent.

SC.186/2000